How long does it take to train the next generation to run the family business?

Business Leader Post, August 29, 2013

Thomas D. Davidow, Ed.D.

It takes a minimum of five years, assuming that:

  1. That the next generation has not carried into the business any bad habits they might have developed while growing up in your household, such as a poor work ethic or a lack of accountability for their performance in school and in other parts of their lives.  
  2. You brought them into the business because you want them there and they want to be there versus they and their mother wanted you to bring them in.
  3. They are not there for the life style that the family business offers.
  4. They were failing someplace else.

If you don’t address the above issues, the next generation will not have a prayer. Once these issues are addressed and corrected to your satisfaction, it takes five years.
The five years involve the specific training of how to run a business:

  1. Management side of getting the respect of your employees and getting the most out of them.
  2. How to run the business from the financial side—learning how to read the monthly P and L and to understand the balance sheet.
  3. Establishing professional credibility with your bankers, suppliers and customers.
  4. The most important tool and the longest to learn is good judgment. One way for them to learn is to have them shadow you when you go to important meetings. Have them listen and observe.  After the meeting, ask them what they saw and what they thought happened and why. You will get a quick sense of how astute they are, and far they have to go.